Analysis of the 2006-07 Budget Bill Legislative Analyst's Office February 2006

High-Speed Rail Authority (2665)

The California High-Speed Rail Authority (HSRA) is responsible for planning and constructing an intercity high-speed rail system that is fully integrated with the state’s existing mass transportation network. Chapter 796, Statutes of 1996 (SB 1420, Kopp)-the California High-Speed Rail Act of 1996-established HSRA as an independent authority consisting of nine board members appointed by the Legislature and Governor. The HSRA has an executive director and three staff positions.

The authority was due to expire December 31, 2003. Chapter 696, Statutes of 2002 (SB 796, Costa), repealed the expiration date, making HSRA permanent. To provide for development and construction of the rail system, Chapter 71, Statutes of 2004 (SB 1169, Murray), authorized the sale of $9.95 billion in general obligation bonds, $9 billion of which would be for planning and construction of a high-speed rail segment between San Francisco and Los Angeles. Currently, the bond measure is scheduled to be placed on the November 2006 ballot.

Governor Proposes to Indefinitely Postpone High-Speed Rail Bond

As part of his Strategic Growth Plan, the Governor proposes to indefinitely postpone submitting a high-speed rail bond measure to the voters. The budget, however, provides support for the California High-Speed Rail Authority through 2006-07 irrespective of whether the rail project will continue. We recommend budget bill language limiting the availability of the support funds only to high-speed rail-related activities in 2006-07 and directing the unexpended funds to be reverted if the bond measure is permanently postponed.

The HSRA Created for a Single Purpose. The authority was created for the sole purpose of implementing an intercity high-speed rail system as an alternative to air and auto travel. For almost a decade, HSRA has planned and performed environmental studies for the development of such a system. Since the authority’s inception, it has expended about $18 million for environmental studies and planning activities.

Governor’s Proposals Would Halt High-Speed Rail Activities. As part of his Strategic Growth Plan, the Governor proposes to indefinitely postpone submitting the high-speed rail bond measure to the voters. This would essentially terminate the project. The budget, however, requests $1.3 million to support HSRA, but does not include funding for the authority to continue environmental or other work related to the development of a rail system. Discussions with the authority indicate that if the project is to proceed, about $1 billion would be needed in the next couple of years to move forward with the next phase of project development, which includes acquiring critical rights-of-way and completing more detailed project environmental impact reports. If the project is to be terminated, continued HSRA funding is not justified.

Recommend Making Funding for Authority Contingent on Bond Measure. Accordingly, we recommend budget bill language stating that the budget appropriation for HSRA in 2006-07 ceases if legislation is subsequently enacted that indefinitely postpones a bond measure to fund a high-speed rail system. The following language is consistent with that recommendation:

The appropriation in this item is available for support of the High-Speed Rail Authority to work exclusively on a high-speed rail system. Any unexpended portion of this appropriation shall revert upon enactment of legislation that postpones indefinitely the placement of a high-speed rail bond on the ballot.